This article is the first installment of the 2021 Automation supply chain update.
View the rest of the series here.
While it's true that no amount of digitalization can deliver products that don't exist yet, it can smooth the bumps and enable all the processes involved in specifying, ordering and delivering them, and help maintain and optimize them after they arrive. Likewise, digitalization can help users gather data, improve planning, and maintain inventories, so the impact of raw material and product shortages are less severe.
“Things are picking up, but ‘normal’ is still far away. So our plan is to rely more on digitalization really coming to fruition,” says Uma Pingali, business president of Newark. “We’ve used digital platforms to accelerate our business to both adapt to new needs resulting from the pandemic and deliver an overall improved experience for our customers. Many work-at-home customers still need to evaluate products with online and digital tools, so we augmented our search speed and capabilities because many have been unable to visit their own clients in the field. Thanks to better routing, website speed, software optimization and data structuring for channel loading, users can now find products three seconds faster, which is even more of a priority during the pandemic.
“Our sales declined in mid-teens percentages during the early stages of the pandemic due to work-from-home constraints, so we needed to adapt and make changes. We've since made the necessary changes and have grown our business three to four times the run rate of growth compared to pre-pandemic sales levels depending on product category.”
More bandwidth for better user experiences
Even though he uses Microsoft Teams, Pingali explains he was concerned that traditional avenues of email, texting and even social media may not be adequate to meet the needs of users. When lead times for products get long, supply chains are disrupted and shortages become the norm. “To address these forces, we expanded the breadth and depth of our inventory, and added a few hundred thousand stock keeping units (SKU) including more digital offerings. This allows more customers to buy from us, and we’re never going back,” explains Pingali. “We’re also improving our user experience (UX) by getting products to customers, usually in just two or three days. However, we’re also providing better estimates for when out-of-stock products are anticipated to arrive, including cost of freight in a certain number of days. We estimate that our online ordering and paying, anticipation estimates, and shipping scheduling have improved 70-80%.”
Pingali adds that Newark is also performing more electronic data interchanges (EDI) with its suppliers. “EDIs let us do more ordering before longer lead times arrive," explains Pingali. “Besides delivering product information more efficiently, we’re also making it easier for users to talk to our tech support people, ask questions, and get quotes faster. We had these capabilities before, but now we’re augmenting them with added data processing resources. This makes queries clearer, lets us monitor dashboards more closely, and achieves better routes for emails and chats.
“In addition, our parent company, Avnet, has field application engineers, and we’re referring customers to them, too. We also host the main forums of the element14 engineering community, which has been upgraded, and provides peer-to-peer connectivity, so engineers can talk to each other, and participate in community-specific areas covering products, IIoT, services and software.”
Pingali concludes that all of these upgraded procurement and planning capabilities let Newark and its suppliers move beyond simple low-price strategies to develop a heightened sense of engagement with their customers. “We’re also making sure that customers’ schedules can be met and that deliveries to them will be timely, which is even more important these days," says Pingali. “This is a more holistic approach than simply focusing on low prices, but it also requires more frequent and collaborative planning.”
